Illinois eliminates highest-cost debt with bonds sale

The State of Illinois sold $965 million in bonds on Aug. 22. 

More than 87 institutional investors made bids for the bonds with orders totaling more than $4 billion, according to a news release. Both Series A and Series B Bonds were sold. 

The sale included $641 million in Series A Bonds, which were a takeout of 2003B variable rate bonds. 

“By refunding the $600 million in variable-rate debt, the State eliminates its highest-cost debt and replaces it with traditional fixed-rate bonds carrying a much lower overall rate of interest,” Illinois Budget Director Hans Zigmund said in the release. “By refunding other outstanding bonds with higher fixed rates as part of the same bond sale, we maximized savings and minimized the costs of the sale. Taxpayers will realize these savings for years to come.”

Hans Zigmund  

The $324.6 million in Series B Bonds will be used to refund several series of previously issued general obligation bonds. 

All the bonds are rated BBB by Baa3 by Moody’s Investor Service, Fitch Ratings and BBB- by S&P Global. They are fully exempt from federal taxation.

Facilitating the sale for the state were: J.P. Morgan. Bank of America Merrill Lynch, Loop Capital Markets LLC, PNC Capital Markets LLC, Siebert Cisneros Shank & Co. LLC, Blaylock Van LLC, Cabrera Capital Markets, IFS Securities, Mischler Financial Group Inc. and Stern Brothers.

Columbia Capital Management LLC was the state’s financial adviser for the transactions. The state’s swap adviser was Swap Financial Group.

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